Reining in the rip-offs

Here's the scam: a telemarketer promises effortless riches from property investment - just attend a free seminar. There you're persuaded to sign up for a course. Can't afford the $12,000 fee? No problem. Here's a company that will lend it to you. At the course you are put under pressure to buy an investment property, a home unit with a guaranteed 5 per cent rental yield. The inflated rent underpins an overblown valuation of the unit for $500,000. No money? Still no problem. Secure the unit with a deposit bond - just $5000 - and when you have to settle, the company that financed your course will lend you the money. It's such a good deal, perhaps you should buy two.

You may not be told that the company running the seminar is also selling you the home unit, or whether there are kickbacks or commissions involved. And maybe you won't care while real estate prices keep rising, as they have - until now. But the last in will probably be the first to lose out. A chorus of unhappy investors will soon be asking: why didn't the Government do something? The Australian Securities and Investment Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC), with state departments of fair trading, will be hard-pressed for a persuasive answer. There has been talk of action for years, yet governments have sat on their hands.

ASIC did not move against promoter Henry Kaye until June, and then only because he wrongly claimed his courses had ASIC's endorsement. Kaye agreed to repay those he had misled. Soon his seminar company was in receivership. If he hadn't over-reached himself by misusing ASIC's name, he might still be in business. Plenty of other get-rich-quick promoters certainly are. ASIC will say they are not its concern, as real estate is a state responsibility. The Commonwealth and the states agreed three months ago to get their act together, but no plan of action is expected before March.

In the meantime, tens of thousands of people have already signed up to schemes that promise to make them millionaires. Whether they are seen as naive and greedy - or merely aspirational - they deserve better from government watchdogs. Above all, there should be transparency so investors can see who is in league with whom to grab their money. The ACCC - which has lately moved against misleading advertising by Kaye and others - should also take action under the Trade Practices Act whenever kickbacks and commissions are not disclosed and marketing is passed off as education. And ASIC should be supervising real estate investment - especially where it involves substantial loans - as strictly as it oversees investment in shares and other securities. If ASIC lacks the power to do the job, the states should co-operate to see that it gets it. Australia needs the swift introduction of an effective national regulatory regime.

Freeing Iraq, again

Iraqi Freedom II. The name says it all. This new American combat strategy is a belated acknowledgement of the growing sophistication and operational capacity of anti-US guerilla forces inside Iraq.

Six months after declaring Operation Iraqi Freedom I a success, US officials finally conceded late last month that a "clever and adaptive" enemy has emerged from the post-invasion chaos. The guerilla forces' strategy is now clear: to isolate the Americans from the international support they need to rebuild a democratic Iraq and, thus, discredit Washington's decision to invade.

The guerilla forces are running a ruthless campaign which targets anyone associated with the US occupation; military allies and humanitarian agencies; foreigners and Iraqis. In doing so, they exploit the key weakness of America's Iraq strategy: isolation. The invasion of Iraq, without UN backing, saw Washington "go it alone" as a self-appointed global arbiter of right and wrong. There was little doubt, however, that Washington was counting on the United Nations and international aid agencies to assist in the reconstruction effort. The anti-US guerillas are now seeking to force the United States to stay this difficult, bloody course alone.

Morally, the US cannot withdraw. Rather, Washington needs to transform the American occupation into an international responsibility in which many nations, including those of the Muslim world, have a stake. But the US President, George Bush, has done little to humble himself to this task.

The best chance of defusing the security crisis in Iraq lies not in the new urban warfare strategy of Iraqi Freedom II, but in the authority of the UN. It is the UN, not Washington, which has the legitimacy and experience to oversee reconstruction and the return of sovereignty to the Iraqi people.

As each week passes, the level of danger in Iraq increases. The International Red Cross, for example, can no longer operate effectively because its charter of neutrality prevents it from barricading its officials behind barbed wire. It has already suffered the consequences.

For foreign governments supporting the US in Iraq, the rising death toll is becoming a political liability. After seven Spanish military intelligence officers were killed last weekend, that nation's Prime Minister, Jose Maria Aznar, vowed his troops would stay. However, 85 per cent of Spaniards believe the war in Iraq was a mistake. Australia, too, cannot ignore the increasing risk to its personnel, nor the modest role it might play in expanding international co-operation.